Entrepreneurship - Rhonda Abrams

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Census Bureau conducts primary research when it sends out tens of thousands of census takers to count every person in the country. Industry associations often collect data from association members to compile information about industry trends, pricing, and other issues. Professional polling companies and research organizations often do original—or primary—research. You might do your own primary research by surveying prospective customers or interviewing others in your field.

      Primary research is particularly useful for gathering information from prospective customers for a new product or service. However, since primary research entails gathering data directly from subjects, conducting it can require a great deal of time and money. Nevertheless, primary research is often necessary when no other data is available, and it can provide you with valuable insights into customer preferences.

       en·tre·pre·neur·ship key terms

       Beta testing

      The testing of a product or service before its official release. Customers or clients who take part in beta testing provide feedback on how a company can improve its products or services and make them more appealing to consumers.

       NAICS codes

      Developed by the governments of the United States, Canada, and Mexico as a way to standardize industry categorization, numerical NAICS codes classify every type of business in North America. Providing this code when searching for business information makes locating that data much faster and easier and produces more accurate results.

       Primary research

      Original research done by collecting data directly, typically from research subjects.

       Qualitative information

      Generally, subjective information, frequently expressed in words, not numbers.

       Quantitative information

      Data that is expressed in numbers.

       Secondary research

      Research that compiles, analyzes, or compares data collected from others who conducted their own original research.

      ■ Secondary research. Research that relies on data collected from others who conducted their own original research. This type of research often compiles, analyzes, or compares existing data.

      As an entrepreneur collecting information to help you make good business decisions, you’ll rely most on secondary research. Many sources of primary research data are government agencies (which often provide it for free), industry associations, or private research companies (typically specializing in certain industries) that may charge substantial sums of money for the data they gather, such as Gartner or Forrester for technology-related research, Gallup for consumer behavior, and so on.

      An important business skill is the ability to find and use information that has been collected by others and is already available in thousands of libraries, websites, and online databases.

       PRIMARY VS. SECONDARY RESEARCH

PRIMARY RESEARCH SECONDARY RESEARCH
Data collected by government agencies or research companies (for instance, U.S. Census Bureau or IRS data) Reports based on analyzing and evaluating data collected by others
Data collected through consumer surveys, polling, focus groups, beta tests, and taste tests Graphs and charts created based on data collected by others
Financial data included in corporate annual reports Compilations of data from a number of sources
Original reports, created by the collectors of data gathered using any of the methods above, perhaps including tables, graphs, or charts Articles based on interviewing those who conducted primary research
Books that evaluate or analyze data collected by others

      When conducting business research, you’ll look for cold, hard facts: the size of your market, the historic growth rate of your industry, and the annual revenues of companies in your industry. You’ll also dig for insight and analysis: why customers behave a certain way, or which trends will likely affect your industry in the future. In other words, you need both quantitative and qualitative information.

      ■ Quantitative research. Data that is expressed by numbers. Examples of quantitative information include the total amount consumers spent on a product in a year, past growth rates of an industry, the market share distribution of major competitors, and numerical results of consumer surveys. You’ll find this kind of data in reports from government agencies and research companies, library databases, industry associations, and consumer surveys.

      ■ Qualitative research. Generally, subjective information, frequently expressed in words, not numbers. Examples of qualitative information include experts’ observations about what motivates consumers, forecasts of future industry trends, customer views of major competitors, and comments consumers make about a product. You’ll find this kind of information in news reports and articles from industry and general-interest publications, as well as by conducting your own research.

      Numbers add believability to a business plan, marketing plan, or other business report because they reflect how the market or industry actually works and has behaved in the past. Numbers show you’ve done your homework. But there is no reliable quantitative data about the future. So you’ll need qualitative information to give insight into what might happen in the years to come.

      Don’t underestimate the value of qualitative data when conducting business research. Whether you’re trying to convince investors to finance your business, figuring out whether to launch a business or product, or planning a marketing campaign, you’ll have more success and can present a stronger, more compelling case by combining both types of information.

      REAL-WORLD RECAP

       Types of business research

      ■ Primary

      ■ Secondary

      ■ Qualitative

      ■ Quantitative

      When thinking about launching an entrepreneurial venture—or any business—the three basic areas of research you’ll want to look at are:

      ■ Industry

      ■ Market

      ■ Competition and company

      Certainly, you’ll want to research other issues that are important for your particular business. For instance, if you manufacture a product, you’ll want to research suppliers and distribution channels. If you develop a technology product, you may need to research technical standards. In many businesses, you’ll need to research governmental regulations.

      Start your research process by figuring out exactly what you need to look for. Begin by answering two questions:

      1. What primary question do I want my research to answer?

      2. How will I use the information I find?

      A good way to begin your research is by asking a fundamental question that challenges the basis—or underlying assumption—of your business (or a portion of it). For example, if you plan on opening a chain of environmentally friendly,

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